China, Iran’s Leading Number One Supplier

A01926184.jpgChina could overtake Germany as the leading exporter of goods to Iran as early as this year, according to western diplomats and Iranian businessmen. The shift reflects Tehran’s attempts to redirect its trade in the face of pressure over its nuclear program.

Germany, which has been the top exporter to Iran for 30 years, supplied goods totaling $5.08bn (EU3.6bn) to the country last year, according to the Iranian central bank, but in the first five months of this year its exports fell 19.8 per cent.

China, which has enjoyed growing trade since the early 1990s, ranked third behind the United Arab Emirates last year, with $4.48bn of exports, up 35.8 per cent on 2005.

The trend is set to continue this year, with diplomats predicting China will become the leading supplier to Iran.

The trade shift is partly driven by the prospect of sanctions over Iran’s nuclear program. A meeting of leading powers next week will discuss a new United Nations resolution and possible fresh curbs against Iran.

Unilateral US action, meanwhile, has put international organizations, notably banks, under pressure to stop conducting business with Tehran or risk action against their interests in the US. In recent weeks three German banks, including Deutsche Bank, have reduced business with Iran.

Asadollah Asgaroladi, head of the Iran-China Chamber of Commerce, says, “We have no choice but to look at the east.”

He believes Iranians prefer trade with the west because of historical ties and “our factories are dependent on their technology. But what else can we do when they [the west] turn their back on us and bow to US pressure”.

In another sign of the trade shift, Italy’s exports of technology and household goods – which have dipped since 2003, when Iran’s nuclear program became the focus of international scrutiny – fell 18.5 per cent last year to $1.8bn.

But exports from neighboring Turkey rose 26.5 per cent in the first seven months of this year against the same period in 2006.

Analysts in Tehran caution that the figures might be slightly distorted amid suspicions that some European trade is being redirected through the UAE.

The total volume of Iran-China trade was $16bn last year, with Mr. Asgaroladi predicting it will reach at least $17bn this year.

He says the volume of trade in the first eight months of this year was $12bn, with the balance in Iran’s favor due to oil exports.

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